Changes in Demand
LO
TO EXPLAIN THE SHIFTS IN THE DEMAND
CURVE.
 Key Term – Inferior good
 An increase in demand is when the entire demand
curve shifts to the right. Therefore the demand
increases when the prices stays the same.
 A decrease in demand is when the entire demand
curve shifts to the left. Therefore the demand
decreases while the price stays the same.
Change in demand.
 An example but we will draw our own.
Factors that cause demand curve to shift.
 PASIFIC
 Population – size and composition of population.
E.g If more elderly people more demand for elderly
products.
 Advertising – Good and Bad advertising. E.g Ratners
– Move D – D2
 Substitutes – If price of substitute goes up, demand
for your good increases. Likewise if price of
substitute goes down, demand goes down,
 Income - Whats important here is the difference
between a ‘normal’ and ‘inferior’ good.
 Normal good – butter
Inferior good – margarine
 Normal good - Income up can affect butter D-D1
• Income down can affect butter D- D2
 Inferior good - Income up demand shifts D-D2
(more people buying butter)
• Income down demand shifts D- D1
 Fashion = Item in fashion D1, Out of fashion D2
 Interest Rates - Linked to income.
 If interest rates go up, so does your mortgage,
therefore less income. So revert to income.
 Compliments - Goods that go together.
 E.g DVD player and DVD discs. Price of discs goes
down, demand for DVD player goes up.
 HW
 Activity 1 & 2 Page 19